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'Classic signs of euphoric sentiment': Famed economist David Rosenberg warns that Snowflake-led IPO mania is inflating a market bubble that could soon pop

'Classic signs of euphoric sentiment': Famed economist David Rosenberg warns that Snowflake-led IPO mania is inflating a market bubble that could soon pop


HENNY RAY ABRAMS/AFP/Getty Images




David Rosenberg — the founder of Rosenberg Research and famed economist who forewarned about the housing bubble — pegs the latest IPO mania as yet another reason to be skeptical of stocks.




Rosenberg points to deviations between historical relationships, overzealous market sentiment, and excessive appetite for IPOs and secondary offerings as fodder for his thesis.




For months now, Rosenberg has stated that equities were simply in the midst of a bear market rally, adding that "we're in the reflexive rebound right now," which precedes a steeper drawdown.




"Unfortunately, many will try to explain why this time is different, but the fact is the quality of companies appears to be no better than they were twenty years ago," he said.




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Although most would rank 2020 exceedingly high on a list of years to soon forget, the past few months haven't been all that bad from an investing standpoint.Despite an unprecedented virus, stockpiling bankruptcies, and double-digit unemployment, markets have demonstrated a fierce level of stoicism. On Friday, the S&P 500 sat about flat for the year.But now, things are getting stranger. And David Rosenberg, the famed economist and founder of Rosenberg Research, thinks he's pinpointed a reemerging trend that could aid an unwind a?? one investors haven't had to grapple with for decades. He is concerned about the spurt of initial public offerings that was most recently juiced by the record-breaking debut of cloud-software provider Snowflake. "Going into this recent corrective phase, we have been identifying signs of excess and elevated sentiment whether it be in retail participation, the Citi panic/euphoria model, fund flows into ETFs, small speculator positioning in the Nasdaq or the elevated bull-bear spread in the Investors Intelligence survey," Rosenberg said in a recent client note.
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